It’s easy to understand why someone might be tempted to commit insurance fraud because the lure of money never ceases.
The state of the economy combined with the draw of “easy money” continues to make insurance fraud a low-risk, high-gain proposition to most criminals.
“The economy is squeezing more and more consumers and forcing growing numbers into a financial bind. This is creating a great deal of temptation for some consumers to seek a financial bailout by bilking their insurance companies with bogus claims. Exactly how much is unclear but there is some evidence that the economy is having an upward effect on insurance fraud,” says James Quiggle, director of communications at the Coalition Against Insurance Fraud, a non-profit organization dedicated to fighting insurance fraud.
Even with the hard facts in hand, it’s difficult to understand how some fraudsters manage to tie their own shoes, yet alone take part in a lucrative insurance racket. However, industry estimates show that insurance fraud costs—cheating unsuspecting consumers of nearly $30 billion a year—not that any of the following 12 crooks would have a chance of collecting the proceeds.
12. The Armenian mob
An Armenian mob boss was convicted of running a massive Medicare fraud ring that netted $163 billion in bogus claims. Armen Karazianis was head of an enterprise that used 118 phony clinics across 25 states that filed Medicare claims for services that were never performed and stole the identities of patients and doctors from clinics.
At one California clinic, for example, the group stole the identities of 2,900 Medicare patients and filed claims for services that were never performed.
The outfit also bribed a hospital employee in New York City to gather patient information, then solicited the involvement of patients by posing as a hospital referral service for crash patients. The group would also stage accidents.
“There’s this concept that insurance fraud involves a lot of solo operators, doing one-person schemes all on their own when in fact a large portion of the billions of tens of billions that are stolen every year involved well-organized large gangs with complex operations that are geared toward stealing large amounts of insurance money in a very short period of time,” Quiggle says. “Basically insurance fraud is becoming corporatized with assembly line efficiency.”
Karazianis received a three-year sentence. Many of his cohorts fled overseas.
11. From arson to mass murder
Although William Craig Miller of Scottsdale, Ariz. thought torching his own house would get him out of his financial problems, that $440,000 insurance claim came with a hefty price—five dead bodies and a death sentence.
Miller’s employee, Steven Duffy, helped him with the arson. Police became suspicious after finding gas cans and a burn pattern that indicated gasoline had been poured throughout the house. Duffy and his live-in girlfriend, Tammy Lovell, later decided they would testify against Miller in court.
“He was in debt and having severe financial problems so he torched his luxurious house in Arizona but had made the mistake of hiring his handyman, an employee at his office, to help do the job. The employee got remorse afterwards and was planning to testify against Miller,” Quiggle says. “Miller was cornered, his employee was going to testify against him so he had to go.”
As the date of his insurance fraud trial approached, Miller entered Duffy’s home at night and shot the couple execution style, along with Duffy’s 18-year-old brother, Lovell’s 10-year-old son and 15-year-old daughter.
Miller told conflicting stories to police about the shooting. He originally claimed he wasn’t there, then later said he shot Duffy in self-defense after trying to retrieve some of his possessions from Duffy’s house—a story that would not explain why everyone in the home was killed.
He received a 14-year sentence for the insurance arson and a death sentence for the murders.
10. Stole from his daughter
Virginia accountant James C. Cilenti couldn’t collect on his wife’s life insurance policy because he was a “person of interest” in her death—so he stole the money from his adopted daughter instead.
According to the U.S. Department of Justice, Cilenti couldn’t collect on the $500,000 claim because of the ongoing investigation. Cilenti and his attorney, Christopher Agresto, convinced the insurance company to put the money into a trust for his daughter, a minor, with the stipulation that Cilenti would not have access to the funds.
Agresto, acting as trustee, then transferred more than $400,000 in trust funds to Cilenti. The daughter never knew about the trust, or the fact that Cilenti also stole $7,600 in Social Security survivor benefits that also belonged to her.
Cilenti and Agresto pleaded guilty in November 2011 of one count of conspiracy to commit wire fraud. Cilenti also pleaded guilty to one count of aggravated identity theft. In February 2011, he received a 64-month sentence and was ordered to pay $465,748 in restitution. Agresto received a 24-month prison sentence.
9. Calendar killing
Baltimore Pastor Kevin Pushia befriended a legally-blind and mentally-disabled man, took out a life insurance policy on him and hired two hitmen $50,000 in church funds to kill the man.
Pushia hoped to receive $1.4 million in insurance money but wound up with a life sentence instead.
The victim, Lemuel Wallace, was taken from the group home where he lived to a public park restroom and shot execution-style in February 2009. Pushia, who also worked as a caseworker dealing with the disabled, had posed as Wallace’s sibling to list himself as beneficiary on several policies that he took out in the victims name.
“Kevin Pushia sunk to a new low, even for the worst of the worst insurance schemers,” Quiggle says. “He befriended a blind and developmentally disabled man, earned his confidence, had life insurance policies taken out in the man’s name and then had him murdered in a public park bathroom so he could cash in on the life insurance policy.”
Pushia plead guilty to all charges after his story fell apart in court. It was revealed that Pushia’s calendar had a notation the day after the murder: “LW project completed.”
Two alleged gunmen were identified by Pushia, but his inconsistencies in discussing the case made it impossible to prosecute them. He received a 45-year sentence on charges from the insurance fraud and life in prison for the murder.
8. No place for amateurs
A Long Beach, Calif. couple, Victor and Olga Barriere, had a $315,000 mortgage and a rundown house they couldn’t sell. Their solution was to hire their handyman, Thomas Trucios, to set the place on fire for the insurance money.
Trucios wasn’t experienced in such matters and used so much gasoline that the resulting explosion cracked sidewalks and woke the neighborhood and engulfed him in flames. He died later that day in a hospital.
“Many arsonists don’t know what they’re doing,” Quiggle says. “Gasoline is a virtual liquid bomb. People think you just slosh it around, toss a match and then you can walk out and watch the place burn up. Gasoline explodes when the vapors reach critical mass so you don’t have a campfire, you have a massive fireball that can destroy the building and barbecue anyone within a few feet of the blaze.”
The Barrieres’ could’ve faced murder charges, but argued they never meant for Trucios to get hurt. Victor was sentenced to 14 years and four months for insurance fraud, manslaughter and arson. Olga received six years for fraud.
7. Officer down, or just resting?
A bulletproof vest can save someone’s life, but not their career if they decide to shoot themselves in the gut.
Los Angeles school patrolman Jeff Stenroos sent the area around El Camino High School into a state of lockdown in January 2011 after he was discovered on the ground near his squad car after being shot in the vest.
A police manhunt scoured the area but couldn’t find the assailant, because the officer shot himself hoping to file a worker’s compensation claim and get time off.
“The local school system was shut down because the school thought there was a murderer walking a round, so the kids were locked into their classrooms for hours, some of them without toilets, food and water,” Quiggle says. “Traffic was snarled while police were combing the area. Dozens of police were diverted from real crime-fighting duties while on a goose chase for an assailant who didn’t exist.”
An eight-mile perimeter around the shooting was cordoned off and nine other schools were locked down as well, with a bruised Stenroos participating in the search after being treated and released from the hospital.
Stenroos got his workers-comp leave, but also gave differing accounts on the details of the shooting and how many shots were fired. For awhile he avoided talking to investigators, which made them even more suspicious.
“Once they finally did contact him he started telling contradictory stories that didn’t add up so it was inevitable that his story was going to be picked apart,” Quiggle says.
Stenroos received a four-year sentence for insurance fraud and other crimes. He’s also being sued by the city and school district to recover the $350,000 cost of the dragnet and $58,000 in medical costs.
6. Jailhouse Lite rock?
When planning an insurance fraud scheme, it doesn’t help if one of the accomplices is already being wiretapped for corruption.
Radio DJ Tanya Cruise, aka Lori Sergiacomi, discovered this the hard way when her basement was flooded during a storm but she didn’t have flood insurance.
Sergiacomi, DJ at Lite Rock 105 in the Providence, R.I. area, decided to trash her home for the insurance money and hired two local politicians to make it look like storm damage.
John Zambarano, a North Providence councilman, and Robert Ricci, a former town council president and home contractor, helped her put a hole in the roof and damage the rest of the home. Sergiacomi also bribed an unlicensed insurance adjuster to doctor the paperwork.
Unfortunately for all of them, Zambarano was already being wiretapped by the FBI on a bribery scheme involving construction contracts—and he was recorded bragging to a friend about the crime.
“The scene fell apart because one of the politicos was being wiretapped by the feds for other corruption allegations and he spilled the whole scheme on tape and so the investigators got a 2-for-1,” Quiggle says. “They not only got him for his corruption scheme but also the fraud scheme all recorded, packaged and delivered to the prosecutors.”
Sergiacomi was sentenced to four months in a halfway house and four months home confinement. Zambarano received nearly six years in federal prison for insurance fraud and corruption. The adjuster, Vincent DiPaolo, received six months in a halfway house and six months of home confinement. Ricci received two years of probation.
5. Don’t lie about the FBI
Bridgette L. Buckner, an employee at Chicago-area employer Hallmark Services Corporation, lost her young daughter in April 2008 and received $10,000 on a life insurance benefit.
Buckner was so distraught she took time off from work.
Her husband, an FBI agent, died in the line of duty in September that year and Buckner was paid $15,000. She had a vivid story of how he was shot in the lungs and died.
Yet both stories were false. Buckner did lose a daughter, but it was four years earlier and long before she worked at the company. Her estranged husband was still alive but had never worked for the FBI—and it was his “death” that tipped off the authorities.
The insurance company became suspicious and the investigator handling the case just so happened to be a former FBI agent who would’ve remembered losing a colleague. The bureau had no record of the husband working there and there weren’t any obituaries listed in the newspaper.
“He asked a few questions and it turned out nobody by that name had been killed and didn’t even exist as an agent so that wiped out her story in a heartbeat,” Quiggle says.
Buckner was convicted and went on the lam, but was caught in October 2011 and is now serving a 10-year sentence.
4. Diamonds not forever, when the security camera works
Two New York jewelry store owners, Atul Shah and Mahaveer Kankariya, must’ve been watching too many movies when they hired a couple of guys to engage in a fake robbery of their store.
The “thieves” entered the store dressed as Hasidic Jews with fake beards, wide brim hats and fake guns, then “forced” the owners to give them access to the safe. Yet the owners had already stolen the diamonds themselves and were caught in the act by their own security cameras.
The owners tried pouring industrial strength drain cleaner onto the security system’s electronics, but the equipment still functioned enough to catch them in their scheme to file a $9 million bogus insurance claim. The pair even tried to claim that they had simply forgotten they’d removed the $9 million in loot from the safe.
“Try to imagine the desperation of two people who are so far in debt that they have to hire costumed thugs to rob their own store and also imagine that they’re so inept that their own security systems shows the owners themselves stealing their diamonds before the robbers even arrive,” Quiggle says.
They were each sentenced to up to five years in prison.
3. Cow parts in a coffin
Jim Davis of Los Angeles received a grand farewell when he died in 2006. There were plenty of mourners on hand for the service and burial.
The only problem was he never actually lived. His existence and funeral were faked to collect on a $950,000 life insurance policy.
Phlebotomist Faye Schilling and mortuary worker Jean Crump bought life insurance policies and, once they matured, used bogus death certificates to collect the benefits.
“These people actually staged a graveside burial with fake mourners at the gravesite to make the service look realistic to onlookers while they actually lowered the coffin into a grave and covered it with dirt,” Quiggle says. “That’s how far they went to make this harebrained plot look realistic.”
Quiggle says although forgeries are not unusual on bogus life insurance claims, a phony funeral is probably a first. When an insurance company started investigating, Crump and Shilling decided to unbury the empty casket and have it cremated. They filled it with cow parts and a mannequin to make it heavy enough to fool workers at the crematorium.
“If there is an investigator who is following them at least there is the appearance of a real funeral that would seem to validate the claim that somebody actually died,” Quiggle says. “The problem with this scheme is Jim Davis didn’t exist, he was a ghost. He was little more than the sum of cow parts and a mannequin.”
Their attempt so bribe a doctor into forging medical records didn’t go as well, for he cooperated with the authorities and recorded Shilling explaining the entire story. The investigation also discovered that Crump and Shilling used the death of an Arkansas woman, Laura Urich, to collect $50,000 in life insurance funds.
Urich did indeed exist, but she died two years earlier, so Crump and Shilling forged a new death certificate for her—and the address they used was that of a Los Angeles strip mall.
Shilling received two years in federal prison. Crump’s sentence is pending.
2. The Pelican brief?
Two Texas men are expected to face a trial this year for alleged insurance fraud after one of them drove a $1.1 million car into a salty pond, just three weeks after buying the car and insuring it for twice that amount.
Car dealer Andy House bought a 2006 Bugatti Veyron in 2009 with an interest-free loan from his friend Lloyd Gillespie, who was listed as a loss payee on the car’s $2.2 million insurance policy.
The lawsuit alleges that House intentionally drove his car into the pond. House said he swerved to avoid a pelican.
Unfortunately for him, an expensive car like that attracts a lot of attention—so much attention that someone in another car caught the incident on video and posted it on YouTube. The pelican-free video became a hit with more than 3 million views and the guy who recorded it disputed House’s story.
“It was also reported that Mr. House left the vehicle running for over fifteen minutes while it was submerged until it died on its own causing unnecessary damage to the vehicle’s engine,” the lawsuit alleges. “Defendant House confirmed this fact and attributed leaving the vehicle running because he was being bitten by mosquitoes around the vehicle.”
The lawsuit also alleges there weren’t any tire marks in the road to indicate a swerve and that an informant said House had previously offered to pay him to steal and burn the car so House could collect the insurance money.
A federal judge rejected motions for summary judgment on the case in November 2011 which cleared the path for it to go to trial—as long as any pelicans don’t get in the way.
1. Severance pay?
A South Carolina man was indicted in February over an alleged plot that involved cutting off an accomplice’s hand for the insurance money.
According to a federal indictment and the U.S. Department of Justice, Gerald B. Hardin, 34, is facing six counts of mail fraud and could face up to 20 years in prison and a $250,000 fine for each count.
The alleged scheme involved Hardin and two other men, who have not yet been identified.
One of them took out three accidental death and dismemberment insurance policies on the other, then the insured’s hand was cut off by Hardin and the other man using a pole saw—basically a small chainsaw at the end of a pole, used for pruning trees.
The three men then received more than $671,000 in settlement checks from the dismemberment policies and a claim against the injured man’s homeowner’s policy where the “intentional dismemberment” incident allegedly took place, according to the indictment.
There’s been no word yet on any potential charges involving the two other men, whether they split the money three ways or if the guy who lost the hand might be eligible for an honorable mention Darwin Award.
